Perusing White’s Coolidge , I Notice Some Similarities

Much as I like the sound of my own words, there are times when it’s better to sit back and let someone else do the talking:

When Calvin Coolidge began his first elective Presidential term the tide of the American industrial and commercial boom of the twenties was almost at its full. Prices and employment continued to rise slightly during the year that followed his inauguration. But as he sat at his desk punctiliously prompt at 8 o’clock the morning of March 5, 1925, the lusty breakers of prosperity roaring in, sounded sweetly in his ears. Here were the savings of multitudes–vast Puritan self-denials–functioning in an economic structure that was producing a rising standard of living; slowly and with what seemed approximate justice, distributing the gross income of the nation even though great fortunes were being prodigally enlarged, even though nearly a fifth of his countrymen in the South, in the mining districts, in the ghettos of the great cities, and in shabby smoke-stained industrial hovels were living on a shamefully low standard. But the net of it, the full-throated chorus of the breakers on the strand washing in the steady swelling tide of middle-class abundance, must have throbbed like a cosmic lyric in Calvin Coolidge’s heart.

If he had cared to listen he might have heard the moan of an undertow. In the agricultural West the farmer had become a free hand soil despoiler and the lumberman a freebooter. Western grain lands were showing a constantly decreasing yield per acre. Pastures were shriveling; forests disappearing. The water level in the Mississippi Valley was steadily receding in the wells, in the creeks, in the rivers. Great floods, uncontrolled, were tearing their disastrous way through the valleys. Mortgages were increasing. Tenantry was on the rise. People were moving restlessly about the land seeking to better unhappy conditions. Migratory labor had begun to work in the wheat harvest, in the citrus country, in the fruit orchards, in the lumber camps, on the docks; a thing scarcely known in the America of Coolidge’s childhood when the home was the very present anchor of the laborer whether in field or factory.

Swifter and more powerfully ran the vortex current of bank expansion through all the Coolidge years. Money in terms of hundreds of millions, even of billions, was coming from all over the continent into the speculative orgy of stock selling. The great banks of the Atlantic seaboard and as far to the west as Chicago were swollen with brokers’ loans. In those years the turgid flood of liquid bank resources, cheap money and credit expansion, covered America. No wonder swindlers reached hand over fist for the gold to be had for the asking.

Yet in that day when Calvin Coolidge came to his desk in his own right in March, 1925, the watchman on the tower from hour to hour was calling, “All is well.”

The foregoing quotation is from A Puritan in Babylon: The Story of Calvin Coolidge by William Allen White, published in 1938. I am wholly indebted for my knowledge of this remarkable book to a column by Robert Bartley a couple of weeks ago in The Wall Street Journal . Consider this column, at least in part, to be a bread-and-butter thank-you letter to Mr. Bartley. I found what he had to say about White’s Coolidge biography so intriguing that I got on the Web and procured a secondhand copy for $35. Both in absolute terms and comparatively (only $10 more than the cover price of Bob Woodward’s useless and pointless Alan Greenspan paean, Maestro , which I am reviewing for Harper’s , and only slightly less than the price of two shares of Cisco), White’s book is a bargain. It would be cheap at a dozen times the price.

William Allen White was one of the great journalists of his day, proprietor of the Emporia (Kan.) Gazette and a man who wrote in a vivid, unafraid way. His biography of Coolidge is also the biography of an era, and has the great advantage of having been written near enough to the events, tendencies and people it deals with to have the ring of human truth and the virtue of close-in perspective. For looking at matters like stock-market crashes, 10 years seems about the right distance.

I don’t bring this book up to imply Hegelian parallels–perhaps tragic, perhaps farcical–between Coolidge’s time and our own. There are some similarities, and there are obvious differences. Both eras had dominant central bankers who basically worked for Wall Street: we, the Great Greenspan; our Coolidge-era ancestors, one Benjamin Strong, governor of the New York Fed, another blowhard with a gift for talking convincing, oracular rubbish while keeping the monetary pedal to the metal.

The reason I find White’s book so compelling is that it is so resonant . Not with echoes, necessarily, but with the thump and clang of reality banging on Faulkner’s red rock. It is about how and why things go wrong, which is a lesson no historical particularity or difference of detail can obviate. It’s a book that reminds us how much we choose to forget, and how quickly. We don’t hear much about the recession of 1927 these days, do we? But it happened–”railroad incomes were off eleven percent”–and yet we prefer our history of the era to celebrate 1927 as the year the Babe hit 60 home runs. White points out that tight money and tariffs were primarily responsible after 1929 for turning a capital-markets contraction into a worldwide slump, a lesson soon forgotten and then dissed, and then argued about in academe for the ensuing 50 years until finally revived, relearned and re-respected.

And yet so much does ring of repetition: “Yet everywhere, bank deposits were swelling …. These bank deposits were not investors’ savings. They were, in fact, the product of bank expansion …. Yet curiously the commercial loans of American banks grew comparatively slowly, but the increased security holdings and collateral loans on bonds jumped to unbelievable heights.” Or this: “A drop in stock prices came in the early summer of 1928, which did not continue. By late summer of that year stock prices were again mounting. The upward movement had gained impetus from the credit-easing operations of the Federal Reserve Bank.” Something to think about as the clamor rises for the great G. to cut rates at the next Fed open-market meeting.

On the other hand, as far as I know, we have not re-degraded–the keening of Gore apologists to the contrary–to the point where a sitting Chief Justice could say to a colleague that opposition to a proposed top-bracket tax reduction was merely an effort to “get even with the wealthy and the prosperous.”

The Coolidge boom finished badly. As he comes to the end, White puts forward the big question: “It is fair to ask what was the net of it. What did the American people really get from 1927 to 1929 out of this turmoil of trading that rose above the hum of industry and the quiet business of farming.” In the short term, not as much as it seemed, and in the longer run, catastrophe. And so, watchman, what of this night? What of 2001? Who knows? Who can say? At least Coolidge’s era connived at its own grief under a President possessed of a “high vision for justice through prosperity”–as opposed to ours, when the White House was occupied by a liar, philanderer and perjurer. Is that any consolation, in Heaven or elsewhere? Is part of the blessing of life hereafter a grandstand seat from which to watch history repeat itself, with Santayana digging one’s ribs with a spectral elbow and cackling, “I told you so! I told you so!”

Well, we shall see. Last week, I sent Francis off to his history class with two pieces of paper I happened upon while going through his late step-grandmother’s miscellanea. Both were printed in Germany in 1923, one in Tübingen, the other in Berlin. The former is a bank note for 10 billion marks, the latter for 200 billion. Together, I suppose they might have bought a pound of potatoes, a loaf of salt bread. History may be bunk, as Henry Ford–that greatest (along with Andrew Mellon) of 1920’s business figures–may have decreed, but it always bears thinking about. Which is one very good reason that we read books. Even old ones. Because reality never goes out of print.